Finance Ritual

Abstract

Finance theories are criticized for failing to capture the reality in terms of their outcomes and foundation. Nevertheless, we witness the phenomenon that financial theories are being taught and admired in business schools and actively utilized in the finance circle including financial industries, regulators and academia. This paper provides a ritual interpretation to understand this contradiction. We apply the diverse ritual theories of anthropology to the phenomenon. Among ritual theories, we borrow from the perspectives of functionalism, structuralism, and practice theory. We argue that as a ritual does, finance theories disseminate ideology and beliefs and have an effect on society (especially the finance circle). The effect is determined collectively and is not necessarily as intended by individual financial researchers and practitioners. Finance academia is viewed as an agent to officiate the rite of passage, which helps to reaffirm and recreate the unity of society and finance circle. Finance academia and the finance industry are viewed as a hierarchical structure. Finance theories can survive, as a ritual does, even if they lose their connection with reality.